Malta’s total revenue from taxes and social contributions decreases slightly

Thursday, 31 October 2019, 10:06 Last update: about 7 years ago

In 2018, taxes on production and imports made up the largest part of tax revenue in the EU (accounting for 13.6% of GDP), closely followed by net social contributions (13.3%) and taxes on income and wealth (13.2%).

The ordering of tax categories was slightly different in the euro area. The largest part of tax revenue came from net social contributions (15.2%), ahead of taxes on production and imports (13.3%) and taxes on income and wealth (13.0%).

The overall tax-to-GDP ratio, meaning the sum of taxes and net social contributions as a percentage of Gross Domestic Product, stood at 40.3% in the European Union in 2018, a slight increase compared with 2017 (40.2%).

In the euro area, tax revenue accounted for 41.7% of GDP in 2018, up from 41.5% in 2017.

This information comes from a publication issued by Eurostat, the statistical office of the European Union. Tax indicators are compiled in a harmonised framework based on the European System of Accounts (ESA 2010), enabling an accurate comparison of the tax systems and tax policies between EU Member States.

The tax-to-GDP ratio varies significantly between Member States, with the highest share of taxes and social contributions in percentage of GDP in 2018 being recorded in France (48.4%), Belgium (47.2%) and Denmark (45.9%), followed by Sweden (44.4%), Austria (42.8%), Finland (42.4%) and Italy (42.0%).

At the opposite end of the scale, Ireland (23.0%) and Romania (27.1%), ahead of Bulgaria (29.9%), Lithuania (30.5%) and Latvia (31.4%) registered the lowest ratios.

At 32.7% in 2018, Malta's total revenue from taxes and social contributions was slightly lower than the 32.9% registered in 2017. It is interesting to note that in 2002, Malta's total revenue from taxes and social contributions stood at 30.8% while it then rocketed up to 34.2% in 2007.

Compared with 2017, the tax-to-GDP ratio increased in sixteen Member States in 2018, with the largest rise being observed in Luxembourg (from 39.1% in 2017 to 40.7% in 2018), ahead of Romania (from 25.8% to 27.1%) and Poland (from 35.0% to 36.1%).

In contrast, decreases were recorded in seven Member States, notably in Denmark (from 46.8% in 2017 to 45.9% in 2018), Hungary (from 38.4% to 37.6%) and Finland (from 43.1% to 42.4%).

Looking at the main tax categories, a clear diversity prevails across the EU Member States. In 2018, the share of taxes on production and imports was highest in Sweden (where they accounted for 22.4% of GDP), Croatia (20.1%) and Hungary (18.6%), while they were lowest in Ireland (8.0%), Romania (10.7%) and Germany (10.8%).

For taxes related to income and wealth, the highest share by far was registered in Denmark (28.9% of GDP), ahead of Sweden (18.6%), Belgium (16.8%) and Luxembourg (16.4%).

In contrast, Romania (4.9%), Lithuania (5.7%) and Bulgaria (5.8%) recorded the lowest taxes on income and wealth as a percentage of GDP.

Net social contributions accounted for a large proportion of GDP in France (18.0%) and Germany (17.1%), while the lowest shares were observed in Denmark (0.9% of GDP), Sweden (3.4%) and Ireland (4.2%).